Rush Mortgage Refinance Offer

Why did our bank send us an unsolicited offer for a mortgage refinance? How can we be sure it is not a sophisticated scam?

Our mortgage holder/bank sent us an overnight letter offering to refinance our mortgage for a lower rate with zero closing costs. We had to respond immediately to take advantage of the offer and we are given 48 hours to send the initial paperwork back (permission to access financial records, employment information, etc.). They have the correct information about our mortgage and haven't asked us things like s.s. number or bank account info, but we want to be sure this isn't a very sophisticated scam. It looks legitimate, but the rush-rush concerns us. And why would the current mortgage holder want to offer us a lower rate at no cost to us?

Published: Aug 17, 2010

Review the offer closely to make sure it is not part of a sophisticated scam.

Shop around for the best mortgage refinance rates.

Assuming the offer is legitimate, this is standard operating procedure for mortgage servicers. Before I discuss the second part my sentence, let us look at the first.

Where does the sender want you to return the initial paperwork? Type the address into Google Maps (or Bing or Yahoo) to see if that address is one of your mortgage servicer's. Is the return address on the overnight letter to you from the mortgage servicer? Again, type that address into a search engine and see if it seems legitimate. Review the language in the letter. Many scam artists scrimp on copy editors. An offer rife with typos is a sign you may not be dealing with your bank. If there is a telephone number on the letter type that number into a search engine to see if it is owned by your mortgage servicer. If the addresses, phone number, or language seem odd to you then you may have uncovered a scam and you should throw the letter away without response.

Let us assume the offer is legitimate. The mortgage servicer may be working though its list of customers and discovered you have a high-interest loan, a good payment history, a loan nearing maturity, or live in a neighborhood where housing values have held steady the last few years. If any or especially several of these conditions are true then the mortgage servicer sees you as a prime target for a refinance, and wants to approach you about refinancing before you get the idea on your own and start shopping. After all, good mortgage customers are a valuable commodity.

Alternatively, you may have contacted a bank or mortgage servicer that refinances mortgages, which did a hard pull on your credit report. Your existing mortgage servicer may have a relationship with a credit reporting agency where it receives an alert whenever one of its list of desirable customers gets a hard pull on its credit report, which would indicate that the customer may be thinking about buying a new vehicle (refinance to pay for your new car with your home equity) or refinancing your mortgage to get better terms. Have you applied for a mortgage refinance or a new tradeline that would have caused a hard pull on your credit report lately?

Regarding your question about the rush-rush messages in the letter, I can only speculate that perhaps the letter's copywriter has experience in crafting refinance offers and learned that unless the homeowner has a sense of urgency in completing the refinance application that the homeowner simply forgets about it and throws it away. My guess is the overnight letter packaging coupled with the 48-hour deadline generates a higher response rate than a routine first-class letter sent with no deadline.